General Motors' Internet-Enabled Cars Coming in 2014

DETROIT: Dan Akerson is pushing General Motors to build cars that the US automaker's top executive hopes will attract a target demographic: his grandkids.

"I have grandchildren that have only grown up in a world with smartphones," Akerson, a former telecommunications executive, said on a conference call to discuss GM's quarterly results.

An emerging generation of tech-savvy consumers has changed the way GM and its rivals approach in-car entertainment and navigation systems. If done well, these systems can draw new buyers and allow automakers to tap new sources of revenue and boost profit margins.

So far, many customers and car reviewers have complained that these so-called infotainment systems are clunky and harder to use than the phones in their pockets. Automakers have struggled to find ways to update in-car software so it does not appear outdated over the course of the car's life.

GM says it will be able to make these updates more quickly starting with its 2015 lineup. In mid-2014, the No. 1 US automaker will start selling Internet-capable vehicles that GM says allow passengers in the backseat to watch streaming video.

This feature also gives GM the chance to sell advertising within the car itself. The average American spends just over four hours a week commuting to work, according to federal data. This potentially gives advertisers a chance to promote their brands to a captive audience.

"For example, what happens if when the logo shows on your screen, it says 'brought to you by Allstate'?" said Akerson, using Allstate Corp's name to illustrate GM's options. "How many times is that going to pop? And how much can you get from Allstate?"

GM will earn $20 from each customer who signs up for the internet service. The US automaker is also beefing up its in-vehicle OnStar service, which connects drivers to live operators for directions or emergency help. GM has yet to divulge what kind of Internet and OnStar options will be available and at what price.

Citi analyst Itay Michaeli estimated that OnStar generates about $1.5 billion in annual revenue and the unit is worth between $5 billion and $7 billion as a whole. Compared with competitors, Michaeli said in an April 14 research note, GM is "arguably better positioned to capitalize on connected global trends."